Health Insurer Report Card: Inaccuracy in Claims Payments

Health insurers overall received a low grade on the American Medical Association’s (AMA) / most recent “National Health Insurer Report Card” (NHIRC). Commercial health insurers have an average claims-processing error rate of 19.3 percent, an increase of two percent compared last year, according to the findings. The increase in overall inaccuracy represents an extra 3.6 million in erroneous claims payments compared to last year, and added an estimated $1.5 billion in unnecessary administrative costs to the health system, AMA says. The AMA estimates that eliminating health insurer claim payment errors would save $17 billion.

The findings from the NHIRC are based on a random sampling of approximately 2.4 million electronic claims for approximately 4 million medical services submitted in February and March of 2011 to Aetna, Anthem Blue Cross Blue Shield, CIGNA, Health Care Service Corp. (HCSC), Humana, The Regence Group, UnitedHealthcare and Medicare. Claims were accumulated from more than 400 physician practices in 80 medical specialties providing care in 42 states.

UnitedHealthcare was the only commercial health insurer to demonstrate an improvement in claims-processing accuracy. UnitedHealthcare has shown consistent improvement during the last four years in reporting correct contract fees. Other commercial health insurers showed progressive improvement over four years, but had slight declines this year. In order of accuracy rating among insurers:

UnitedHealthcare—90.23%

Regence—88.41%

HCSC—87.04%

CIGNA—83.02%

Humana—81.99%

Aetna—81.08%

Anthem Blue Cross Blue Shield—61.05%.

Other key findings from this year’s report card include:

Physicians received no payment at all from commercial health insurers on nearly 23%of claims they submitted. There are many reasons a legitimate claim may go unpaid by an insurer. Claims may be denied, edited or deferred to patients. During Feb. and March of this year, the most common reason insurers didn’t issue a payment was due to deductible requirements that shift payment responsibility to patients until a dollar limit is exceeded. Real-time claims processing would save time and money.

Dramatic reductions in denial rates have occurred since last year at Aetna, Anthem Blue Cross Blue Shield, HCSC and UnitedHealthcare, which cut its denial rate by half to 1.05%. CIGNA maintained its industry leading low denial rate of .68%. Lack of patient eligibility for medical services continues to be the most frequent reason for denials.

For the first time the report card measured how frequently claims included information on insurers requiring physicians to ask permission before performing a treatment or service. CIGNA had the highest rate of claims requiring prior authorization, with more than 6% of claims indicating physician work associated with these requirements.

The report card found that CIGNA and Humana have cut their median claims response time in half during the last fours years. Response time varied for commercial health insurers from six to 15 median days.

“A 20% error rate among health insurers represents an intolerable level of inefficiency that wastes an estimated $17 billion annually,” said AMA Board Member Barbara L. McAneny, M.D. “In spite of notable improvements by insurers in the four years since the AMA’s introduced the National Health Insurer Report Card, precious health care resources are wasted because each insurer uses different rules for processing and paying medical claims. This variability adds no value to the health care system and only increases unnecessary administrative costs.”

To help physicians better manage each insurer’s requirements for submitting claims, the AMA’s Practice Management Center offers online resources for preparing claims, following their progress and appealing them when necessary. The Practice Management Center’s library of education materials and practical tools are available online at: www.ama-assn.org/go/pmc.

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